MONROE, La., Feb. 14, 2018
/PRNewswire/ -- CenturyLink, Inc. (NYSE: CTL) today reported
results for fourth quarter and full year
ended December 31, 2017.
CenturyLink Reported Results
The reported results on a consolidated basis include two months
of Level 3's financial performance, as CenturyLink closed the Level
3 acquisition1 on Nov. 1, 2017.
Consolidated total revenue was $5.323 billion for
fourth quarter 2017, compared to $4.289 billion for
fourth quarter 2016 and $17.66 billion for full year 2017
compared to $17.47 billion for full year 2016.
Consolidated diluted earnings per share was $1.26 for
fourth quarter 2017, compared to diluted earnings per share
of $0.08 for fourth quarter 2016. Excluding special
items2 in fourth quarter 2017, the diluted earnings per
share was $0.18. Fourth quarter
special items included a recognized tax benefit of $1.1 billion from the enactment of the Tax Cuts
and Jobs Act, along with $222 million
of acquisition and integration-related expenses. For more
information on consolidated operating results, see the attachments
to this release.
"2017 was a year of significant transformation for CenturyLink.
The sale of our data centers and colocation business followed by
the acquisition of Level 3 Communications positions CenturyLink as
a leading global networking company," said Glen F. Post, III, CenturyLink chief executive
officer. "This strategic combination brings significant scale,
enhances our products and services portfolio, and improves our
long-term financial flexibility.
"We are focused on the successful integration of our businesses
and improving our customer experience through simplification and
automation while achieving our targeted $975
million in annualized run rate cash savings," Post
concluded.
"With this combination, CenturyLink is now better positioned to
meet the needs of our customers and drive long-term shareholder
return," said Jeff Storey,
CenturyLink president and chief operating officer. "We have
organized and integrated our sales, operations and service teams to
meet the specific needs of our customers - from consumers to small
businesses to the largest global enterprises in the world. We are
continuing to invest to meet the needs of our customers and to
provide them with an improved digital experience."
CenturyLink Standalone Results
The following tables provide CenturyLink results on a standalone
unaudited basis and exclude special items (including
integration-related expenses), intercompany eliminations and
acquisition accounting adjustments associated with the acquisition
of Level 3 effective Nov. 1,
2017.
Metrics
|
Fourth
Quarter
|
Fourth
Quarter
|
Full
Year
|
Full
Year
|
($ in
millions)
|
2017
|
2016
|
2017
|
2016
|
Strategic
Revenue3, 4
|
$
|
1,905
|
|
2,028
|
|
7,725
|
|
8,098
|
|
Legacy Revenue3,
4
|
1,633
|
|
1,834
|
|
6,868
|
|
7,624
|
|
Core
Revenue3
|
3,538
|
|
3,862
|
|
14,593
|
|
15,722
|
|
Data Integration
Revenue
|
113
|
|
131
|
|
498
|
|
533
|
|
Other
Revenue
|
313
|
|
296
|
|
1,206
|
|
1,215
|
|
Total
Operating Revenue
|
$
|
3,964
|
|
4,289
|
|
16,297
|
|
17,470
|
|
Adjusted
EBITDA2
|
1,471
|
|
1,585
|
|
5,842
|
|
6,513
|
|
Adjusted
EBITDA2 Margin
|
37.1
|
%
|
37.0
|
%
|
35.8
|
%
|
37.3
|
%
|
Capital Expenditures
5
|
528
|
|
963
|
|
2,886
|
|
2,958
|
|
Core revenues were $3.538 billion
for fourth quarter 2017, declining 8.4% compared to fourth quarter
2016, primarily due to the decline in legacy revenues, as well as
the approximate $150 million revenue
reduction due to the May 1, 2017 sale
of the legacy CenturyLink data centers and colocation business
(Colocation Sale).
Adjusted EBITDA, excluding special items, decreased to
$1.471 billion from $1.585 billion in fourth quarter 2016 primarily
due to the decline in higher margin legacy revenues, along with the
margin impact related to the Colocation Sale.
Level 3 Standalone Results
To enable investors to track the former Level 3's results
through the end of 2017, CenturyLink is providing selected,
unaudited standalone Level 3 financial and operating metrics for
fourth quarter 2017 and full year 2017. These results in the
following tables are based on the former Level 3 definitions for
these metrics and exclude integration-related expenses,
intercompany eliminations and acquisition accounting adjustments
associated with the acquisition of Level 3 by CenturyLink effective
Nov. 1, 2017.
Metrics
|
Fourth
Quarter
|
Fourth
Quarter
|
Full
Year
|
Full
Year
|
($ in
millions)
|
2017
|
20166
|
2017
|
2016
6
|
Core Network Services
Revenue
|
$
|
2,017
|
|
1,933
|
|
7,891
|
|
7,764
|
|
Wholesale Voice
Services and Other Revenue
|
93
|
|
99
|
|
387
|
|
408
|
|
Total
Revenue
|
$
|
2,110
|
|
2,032
|
|
8,278
|
|
8,172
|
|
Adjusted
EBITDA2
|
758
|
|
724
|
|
2,979
|
|
2,865
|
|
Capital
Expenditures
|
301
|
|
306
|
|
1,309
|
|
1,334
|
|
Unlevered Cash Flow
2
|
451
|
|
401
|
|
1,640
|
|
1,528
|
|
Free Cash
Flow2
|
353
|
|
266
|
|
1,141
|
|
1,024
|
|
Network Access
Margin
|
65.7
|
%
|
66.5
|
%
|
66.6
|
%
|
66.7
|
%
|
Adjusted
EBITDA2 Margin
|
35.9
|
%
|
35.6
|
%
|
36.0
|
%
|
35.1
|
%
|
Total revenue was $2.110 billion
for fourth quarter 2017, compared to $2.032
billion for the fourth quarter 2016. Total Core Network
Services (CNS) revenue was $2.017
billion in fourth quarter 2017, increasing 4.3%
year-over-year on a reported basis, and 3.8% year-over-year on a
constant currency basis.
For fourth quarter 2017, total Enterprise CNS revenue, excluding
UK Government revenue, was $1.515
billion, which grew 6.5% year-over-year on a reported basis,
and 6.0% year-over-year on a constant currency basis.
The accompanying financial schedules provide additional details
regarding CenturyLink's and Level 3's standalone performance and
special items and reconciliations of non-GAAP financial measures
for the three and twelve months ended December 31, 2017 and 2016.
Pro Forma Combined Company Results
7
The following tables provide selected financial metrics on an
unaudited pro forma basis for the combined company as if the Level
3 acquisition and the sale of the data centers and colocation
business had been completed on January 1,
2016.
Metrics
|
Fourth
Quarter
|
Fourth
Quarter
|
Full
Year
|
Full
Year
|
($ in
millions)
|
2017
|
2016
|
2017
|
2016
|
Total Adjusted Pro
Forma Revenue 7
|
$
|
6,005
|
|
6,112
|
|
24,127
|
|
24,784
|
|
Adjusted EBITDA
7,8 excluding integration-related expenses
|
2,211
|
|
2,235
|
|
8,741
|
|
9,136
|
|
Adjusted
EBITDA7,8 including integration-related
expenses
|
1,994
|
|
1,998
|
|
8,303
|
|
8,857
|
|
Adjusted EBITDA
Margin excluding integration-related expenses
|
36.8
|
%
|
36.6
|
%
|
36.2
|
%
|
36.9
|
%
|
Adjusted EBITDA
Margin including integration-related expenses
|
33.2
|
%
|
32.7
|
%
|
34.4
|
%
|
35.7
|
%
|
Capital
Expenditures
|
829
|
|
1,248
|
|
4,181
|
|
4,234
|
|
Capital Expenditures
as percent of Total Revenue
|
13.8
|
%
|
20.4
|
%
|
17.3
|
%
|
17.1
|
%
|
Adjusted Pro Forma
Revenue
|
Fourth
Quarter
|
Fourth
Quarter
|
Full
Year
|
Full
Year
|
($ in
millions)
|
2017
|
2016
|
2017
|
2016
|
Business
|
$
|
4,415
|
|
4,451
|
|
17,690
|
|
18,019
|
|
Consumer
|
1,401
|
|
1,485
|
|
5,704
|
|
6,061
|
|
Regulatory9
|
189
|
|
176
|
|
733
|
|
704
|
|
Total Adjusted Pro
Forma Revenue
|
$
|
6,005
|
|
6,112
|
|
24,127
|
|
24,784
|
|
|
|
|
|
|
By Business
Unit
|
|
|
|
|
Medium & Small
Business
|
$
|
874
|
|
918
|
|
3,565
|
|
3,730
|
|
Enterprise
|
1,324
|
|
1,263
|
|
5,223
|
|
5,049
|
|
International &
Global Accounts
|
941
|
|
905
|
|
3,660
|
|
3,603
|
|
Wholesale &
Indirect
|
1,276
|
|
1,365
|
|
5,242
|
|
5,637
|
|
Consumer
|
1,401
|
|
1,485
|
|
5,704
|
|
6,061
|
|
Regulatory
|
189
|
|
176
|
|
733
|
|
704
|
|
Total Adjusted Pro
Forma Revenue
|
$
|
6,005
|
|
6,112
|
|
24,127
|
|
24,784
|
|
|
|
|
|
|
By Service
Type
|
|
|
|
|
IP & Data
Services
|
$
|
1,839
|
|
1,802
|
|
7,276
|
|
7,148
|
|
Transport &
Infrastructure
|
2,092
|
|
2,128
|
|
8,411
|
|
8,675
|
|
Voice &
Collaboration
|
1,716
|
|
1,848
|
|
7,055
|
|
7,617
|
|
IT & Managed
Services
|
169
|
|
158
|
|
652
|
|
640
|
|
Regulatory
|
189
|
|
176
|
|
733
|
|
704
|
|
Total Adjusted Pro
Forma Revenue
|
$
|
6,005
|
|
6,112
|
|
24,127
|
|
24,784
|
|
Liquidity
As of December 31, 2017, CenturyLink had cash, cash
equivalents and marketable securities of $551 million.
Integration Update
During fourth quarter 2017, CenturyLink achieved approximately
$75 million of annualized Adjusted
EBITDA synergies. Integration-related expenses for fourth quarter
2017 were $62 million. In total,
CenturyLink has incurred approximately $170
million in integration-related expenses.
2018 Business Outlook
"We are confident in our 2018 financial outlook with Adjusted
EBITDA growth and strong Free Cash Flow, both before and after
dividends," said Sunit Patel, CenturyLink executive vice
president and chief financial officer. "For the full year 2018, we
expect Adjusted EBITDA2 of $8.75 to $8.95
billion and Free Cash Flow2 of $3.15 to $3.35
billion, excluding Level 3 integration-related
expenses."
Metrics
10
|
2018
Outlook
|
Adjusted
EBITDA
|
$8.75 to $8.95
billion
|
Free Cash
Flow11
|
$3.15 to $3.35
billion
|
Dividends12
|
$2.30
billion
|
Free Cash Flow after
Dividends
|
$850 million to
$1.05 billion
|
GAAP Interest
Expense
|
$2.25
billion
|
Cash
Interest
|
$2.10
billion
|
Capital
Expenditures
|
~16% of
Revenue
|
Depreciation and
Amortization
|
$5.40 to $5.50
billion
|
Non-cash Compensation
Expense
|
$200
million
|
Cash Income
Taxes
|
$100
million
|
Full Year Effective
Income Tax Rate
|
~25%
|
Investor Call
As previously announced, CenturyLink's management will host a
conference call at 4:00 p.m. Central
Time today, February 14, 2018. The conference call will
be streamed live over CenturyLink's website at ir.centurylink.com.
Additional information regarding fourth quarter 2017 results,
including the presentation management will review during the
conference call, will be available on the Investor Relations
website prior to the call. If you are unable to join the call via
the Web, the call can be accessed live at +1 877-666-4225 (U.S.
Domestic) or +1 312-546-6650 (International).
A telephone replay of the call will be available beginning at
6:00 p.m. CST on February 14, 2018, and ending May 8, 2018, at 11:59 p.m.
CST. The replay can be accessed by dialing +1 800-633-8284
(U.S. Domestic) or +1 402-977-9140 (International), reservation
code 21880624. A webcast replay of the call will also be available
on our website beginning at 11:00 a.m.
CST on February 15, 2018, and
ending May 8, 2018 at 11:59 p.m. CST.
Reconciliation to GAAP
This release includes certain non-GAAP historical and
forward-looking financial measures, including but not limited to
adjusted EBITDA, free cash flow, adjusted free cash flow, unlevered
cash flow, core revenues, adjusted net income, adjusted diluted EPS
and adjustments to GAAP measures to exclude the effect of special
items or currency fluctuations. In addition to providing key
metrics for management to evaluate the company's performance, we
believe these measurements assist investors in their understanding
of period-to-period operating performance and in identifying
historical and prospective trends.
Reconciliations of non-GAAP financial measures to the most
comparable GAAP measures are included in the attached financial
schedules. Reconciliation of additional non-GAAP historical
financial measures that may be discussed during the call described
above, along with further descriptions of non-GAAP financial
measures, will be available in the Investor Relations portion of
the company's website at www.centurylink.com and in the current
report on form 8-K that we intend to file later today. Non-GAAP
measures are not presented to be replacements or alternatives to
the GAAP measures, and investors are urged to consider these
non-GAAP measures in addition to, and not in substitution for,
measures prepared in accordance with GAAP. CenturyLink may present
or calculate its non-GAAP measures differently from other companies
and, as referenced in Note 2 below, calculates certain of its
non-GAAP measures differently from Level 3.
About CenturyLink
CenturyLink (NYSE: CTL) is the second largest U.S.
communications provider to global enterprise customers. With
customers in more than 60 countries and an intense focus on the
customer experience, CenturyLink strives to be the world's best
networking company by solving customers' increased demand for
reliable and secure connections. The company also serves as its
customers' trusted partner, helping them manage increased network
and IT complexity and providing managed network and cyber security
solutions that help protect their business.
Forward Looking Statements
Except for historical and factual information, the matters
set forth in this release and other of our oral or written
statements identified by words such as "estimates," "expects,"
"anticipates," "believes," "plans," "intends," and similar
expressions are forward-looking statements as defined by the
federal securities laws, and are subject to the "safe harbor"
protections thereunder. These forward-looking statements are not
guarantees of future results and are based on current expectations
only, are inherently speculative, and are subject to a number of
assumptions, risks and uncertainties, many of which are beyond our
control. Actual events and results may differ materially from
those anticipated, estimated, projected or implied by us in those
statements if one or more of these risks or uncertainties
materialize, or if underlying assumptions prove incorrect. Factors
that could affect actual results include but are not limited to:
the effects of competition from a wide variety of competitive
providers, including decreased demand for our legacy offerings and
increased pricing pressures; the effects of new, emerging or
competing technologies, including those that could make our
products less desirable or obsolete; the effects of ongoing changes
in the regulation of the communications industry, including the
outcome of regulatory or judicial proceedings relating to
intercarrier compensation, interconnection obligations, universal
service, broadband deployment, data protection and net neutrality;
our ability to timely realize the anticipated benefits of our
recently-completed combination with Level 3, including our ability
to attain anticipated cost savings, to use Level 3's net operating
losses in the amounts projected, to retain key personnel and to
avoid unanticipated integration disruptions; our ability to
safeguard our network, and to avoid the adverse impact on our
business from possible security breaches, service outages, system
failures, equipment breakages or similar events impacting our
network or the availability and quality of our services; our
ability to effectively adjust to changes in the communications
industry and changes in the composition of our markets and product
mix; possible changes in the demand for our products and services,
including our ability to effectively respond to increased demand
for high-speed broadband service; our ability to successfully
maintain the quality and profitability of our existing product and
service offerings, to provision them efficiently to our customers,
and to introduce profitable new offerings on a timely and
cost-effective basis; our ability to generate cash flows sufficient
to fund our financial commitments and objectives, including our
capital expenditures, operating costs, debt repayments, periodic
share repurchases, dividends, pension contributions and other
benefits payments; changes in our operating plans, corporate
strategies, dividend payment plans or other capital allocation
plans, whether based upon changes in our cash flows, cash
requirements, financial performance, financial position, market
conditions or otherwise; our ability to effectively retain and hire
key personnel and to successfully negotiate collective bargaining
agreements on reasonable terms without work stoppages; increases in
the costs of our pension, health, post-employment or other
benefits, including those caused by changes in markets, interest
rates, mortality rates, demographics or regulations; adverse
changes in our access to credit markets on favorable terms, whether
caused by changes in our financial position, lower debt credit
ratings, unstable markets or otherwise; our ability to meet the
terms and conditions of our debt obligations; our ability to
maintain favorable relations with our key business partners,
customers, suppliers, vendors, landlords and financial
institutions; our ability to effectively manage our network
buildout projects and our other expansion opportunities; our
ability to collect our receivables from financially troubled
customers; any adverse developments in legal or regulatory
proceedings involving us; changes in tax, communications, pension,
healthcare or other laws or regulations, in governmental support
programs, or in general government funding levels; the effects of
changes in accounting policies or practices, including potential
future impairment charges; the effects of adverse weather,
terrorism or other natural or man-made disasters; the effects of
more general factors such as changes in interest rates, in exchange
rates, in operating costs, in general market, labor, economic or
geo-political conditions, or in public policy; and other risks
referenced from time to time in our filings with the U.S.
Securities and Exchange Commission ("SEC"). For all the
reasons set forth above and in our SEC filings, you are cautioned
not to unduly rely upon our forward-looking statements, which speak
only as of the date made. We undertake no obligation to publicly
update or revise any forward-looking statements for any reason,
whether as a result of new information, future events or
developments, changed circumstances, or otherwise. Furthermore, any
information about our intentions contained in any of our
forward-looking statements reflects our intentions as of the date
of such forward-looking statement, and is based upon, among other
things, existing regulatory, technological, industry, competitive,
economic and market conditions, and our assumptions as of such
date. We may change our intentions, strategies or plans without
notice at any time and for any reason.
(1)
|
On November 1, 2017,
CenturyLink acquired Level 3 Communications, Inc. through
successive merger transactions, including a merger of Level 3 into
its successor-in-interest, Level 3 Parent, LLC.
|
(2)
|
See attachments for
reconciliations of non-GAAP figures used by CenturyLink and Level 3
to comparable GAAP figures. As illustrated in these attached
reconciliation statements, CenturyLink and Level 3 have
historically defined their respective non-GAAP measures
differently.
|
(3)
|
Core revenues is a
non-GAAP measure defined as strategic revenues plus legacy revenues
(excludes data integration and other revenues) as described further
in the attached schedules. Strategic revenues primarily
include broadband, Multiprotocol Label Switching (MPLS), Ethernet,
colocation, hosting, cloud, video, VoIP and IT services.
Legacy revenues primarily include voice, private line (including
special access), switched access and other ancillary
services. The filed SEC reports and accompanying schedules
explain these terms in greater detail.
|
(4)
|
Beginning second
quarter 2017, certain legacy services, specifically dark fiber
network leasing, were reclassified from legacy services to
strategic services. Beginning second quarter 2016, private line
(including special access) revenues were reclassified from
strategic services to legacy services. All historical periods have
been restated to reflect these changes.
|
(5)
|
Capital Expenditures
reflects payments for property, plant and equipment and capitalized
software, excluding amounts capitalized for integration related
projects.
|
(6)
|
The reported fourth
quarter 2016 and full year 2016 results have been adjusted to
reflect changes made to customers assignments between
the
wholesale and
enterprise channels as of the beginning of 2017.
|
(7)
|
Excludes CenturyLink
Colocation revenue and Level 3 amortized revenue from
pre-acquisition deferred installation charges. For a description of
adjustments made in connection with preparing there pro forma
figures, see the pro forma information filed with the SEC in a
current Report on Form 8-K/A on January 16, 2018.
|
(8)
|
Adjusted EBITDA is
defined as operating income (loss) from the Pro Forma Combined
Company Results plus depreciation and amortization expense,
non-cash impairment charges and non-cash stock compensation
expense, adjusted for special items and CenturyLink colocation
revenue and related estimated costs.
|
(9)
|
Regulatory includes
CAF Phase 1, CAF Phase 2 and federal and state USF support
revenue.
|
(10)
|
All outlook measures
in this release and the accompanying schedules exclude
integration-related expenses and other special items, and are as of
February 14, 2018.
|
(11)
|
Free Cash Flow is
defined as net cash provided by (used in) operating activities less
capital expenditures as disclosed in the Consolidated Statements of
Cash Flows.
|
(12)
|
Dividends is defined
as dividends paid as disclosed in the Consolidated
Statements of Cash Flows. Payments of all dividends are at the
discretion of the board of directors.
|
CenturyLink,
Inc.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
THREE MONTHS AND
TWELVE MONTHS ENDED DECEMBER 31, 2017 AND 2016
|
(UNAUDITED)
|
(Dollars in
millions, except per share amounts; shares in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
December 31,
|
|
Increase /
(decrease)
|
|
Twelve months
ended
December 31,
|
|
Increase /
(decrease)
|
|
|
2017
|
|
2016
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
REVENUES
|
$
|
5,323
|
|
|
4,289
|
|
|
24
|
%
|
|
17,656
|
|
|
17,470
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and
products
|
2,498
|
|
|
1,929
|
|
|
30
|
%
|
|
8,203
|
|
|
7,774
|
|
|
6
|
%
|
|
Selling, general and
administrative *
|
1,104
|
|
|
997
|
|
|
11
|
%
|
|
3,508
|
|
|
3,447
|
|
|
2
|
%
|
|
Depreciation and
amortization
|
1,197
|
|
|
958
|
|
|
25
|
%
|
|
3,936
|
|
|
3,916
|
|
|
1
|
%
|
|
Total operating
expenses
|
4,799
|
|
|
3,884
|
|
|
24
|
%
|
|
15,647
|
|
|
15,137
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
524
|
|
|
405
|
|
|
29
|
%
|
|
2,009
|
|
|
2,333
|
|
|
(14)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER (EXPENSE)
INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(481)
|
|
|
(320)
|
|
|
50
|
%
|
|
(1,481)
|
|
|
(1,318)
|
|
|
12
|
%
|
|
Other income
(expense), net *
|
11
|
|
|
(11)
|
|
|
(200)
|
%
|
|
12
|
|
|
5
|
|
|
140
|
%
|
|
Income tax benefit
(expense)
|
1,063
|
|
|
(32)
|
|
|
(3,422)
|
%
|
|
849
|
|
|
(394)
|
|
|
(315)
|
%
|
NET INCOME
|
$
|
1,117
|
|
|
42
|
|
|
2,560
|
%
|
|
1,389
|
|
|
626
|
|
|
122
|
%
|
BASIC EARNINGS PER
SHARE
|
$
|
1.26
|
|
|
0.08
|
|
|
1,475
|
%
|
|
2.21
|
|
|
1.16
|
|
|
91
|
%
|
DILUTED EARNINGS PER
SHARE
|
$
|
1.26
|
|
|
0.08
|
|
|
1,475
|
%
|
|
2.21
|
|
|
1.16
|
|
|
91
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
SHARES OUTSTANDING
|
|
|
|
|
|
Basic
|
887,890
|
|
|
539,965
|
|
|
64
|
%
|
|
627,808
|
|
|
539,549
|
|
|
16
|
%
|
|
Diluted
|
889,135
|
|
|
541,235
|
|
|
64
|
%
|
|
628,693
|
|
|
540,679
|
|
|
16
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DIVIDENDS PER COMMON
SHARE
|
$
|
0.54
|
|
|
0.54
|
|
|
—
|
%
|
|
2.16
|
|
|
2.16
|
|
|
—
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
In the first quarter
of 2017, CenturyLink adopted ASU 2017-07, "Improving the
Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost" ("ASU 2017-07"). ASU 2017-07 modified
the presentation of net periodic pension and postretirement benefit
costs and requires the service cost component to be reported
separately from the other components in order to provide more
useful information. Under ASU 2017-07, the service cost component
of net periodic pension and postretirement benefit costs is
required to be presented in the same expense category as the
related salary and wages for the employee. The other components of
the net periodic pension and postretirement benefit costs are
required to be recognized in other (expense) income, net in
CenturyLink's consolidated statements of operations. This change
was applied on a retrospective basis to all previous periods to
match the current period presentation. This retrospective
application resulted in a $13 million and $2 million increase in
operating income and a corresponding increase in other (expense)
income, net for the three and twelve months ended December 31,
2016, respectively.
|
CenturyLink,
Inc.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
AS OF DECEMBER 31,
2017 AND DECEMBER 31, 2016
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
As of
December 31, 2017
|
|
As of
December 31, 2016
|
ASSETS
|
|
|
|
CURRENT
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
551
|
|
|
222
|
|
Restricted
cash
|
5
|
|
|
—
|
|
Other current
assets
|
3,638
|
|
|
4,940
|
|
Total
current assets
|
4,194
|
|
|
5,162
|
|
|
|
|
|
NET PROPERTY, PLANT
AND EQUIPMENT
|
|
|
|
Property, plant and
equipment
|
51,204
|
|
|
39,194
|
|
Accumulated
depreciation
|
(24,352)
|
|
|
(22,155)
|
|
Net
property, plant and equipment
|
26,852
|
|
|
17,039
|
|
|
|
|
|
GOODWILL AND OTHER
ASSETS
|
|
|
|
Goodwill
|
30,409
|
|
|
19,650
|
|
Restricted
cash
|
31
|
|
|
2
|
|
Other, net
|
14,065
|
|
|
5,164
|
|
Total goodwill and other assets
|
44,505
|
|
|
24,816
|
|
|
|
|
|
TOTAL
ASSETS
|
$
|
75,551
|
|
|
47,017
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
Current maturities of
long-term debt
|
$
|
443
|
|
|
1,503
|
|
Other current
liabilities
|
4,411
|
|
|
3,846
|
|
Total current liabilities
|
4,854
|
|
|
5,349
|
|
|
|
|
|
LONG-TERM
DEBT
|
37,283
|
|
|
18,185
|
|
DEFERRED CREDITS AND
OTHER LIABILITIES
|
9,985
|
|
|
10,084
|
|
STOCKHOLDERS'
EQUITY
|
23,429
|
|
|
13,399
|
|
|
|
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$
|
75,551
|
|
|
47,017
|
|
|
|
|
|
|
CenturyLink,
Inc.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
TWELVE MONTHS ENDED
DECEMBER 31, 2017 AND 2016
|
|
(UNAUDITED)
|
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
Twelve months
ended
|
|
|
December 31, 2017
*
|
|
December 31, 2016
*
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net income
|
$
|
1,389
|
|
|
626
|
|
|
Adjustments to reconcile net income
to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
and amortization
|
3,936
|
|
|
3,916
|
|
|
Deferred
income taxes
|
(1,193)
|
|
|
6
|
|
|
Loss on the
sale of data centers and colocation business
|
82
|
|
|
—
|
|
|
Impairment of
assets held for sale
|
—
|
|
|
13
|
|
|
Provision for
uncollectible accounts
|
173
|
|
|
192
|
|
|
Net loss on
early retirement of debt
|
5
|
|
|
27
|
|
|
Share-based
compensation
|
111
|
|
|
80
|
|
|
Changes in
current assets and liabilities, net
|
(302)
|
|
|
(108)
|
|
|
Retirement
benefits
|
(202)
|
|
|
(152)
|
|
|
Changes in
other noncurrent assets and liabilities, net
|
(197)
|
|
|
(18)
|
|
|
Other,
net
|
75
|
|
|
26
|
|
|
Net cash
provided by operating activities
|
3,877
|
|
|
4,608
|
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Payments for
property, plant and equipment and capitalized software
|
(3,106)
|
|
|
(2,981)
|
|
|
Cash paid for
Level 3 acquisition, net of $2.3 billion cash acquired
|
(7,289)
|
|
|
—
|
|
|
Cash paid for
other acquisitions
|
(5)
|
|
|
(39)
|
|
|
Proceeds from
the sale of data centers and colocation business, less cash
sold
|
1,467
|
|
|
—
|
|
|
Proceeds from
sale of property and intangible assets
|
62
|
|
|
30
|
|
|
Other,
net
|
—
|
|
|
(4)
|
|
|
Net cash used
in investing activities
|
(8,871)
|
|
|
(2,994)
|
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Net proceeds from
issuance of long-term debt
|
8,398
|
|
|
2,161
|
|
|
Proceeds from
financing obligation
|
356
|
|
|
—
|
|
|
Payment of contingent
consideration
|
(3)
|
|
|
—
|
|
|
Payments of long-term
debt
|
(1,963)
|
|
|
(2,462)
|
|
|
Net payments on 2012
credit facility and revolving line of credit
|
35
|
|
|
(40)
|
|
|
Dividends
paid
|
(1,453)
|
|
|
(1,167)
|
|
|
Proceeds from
issuance of common stock
|
5
|
|
|
6
|
|
|
Shares withheld to
satisfy tax withholdings
|
(17)
|
|
|
(16)
|
|
|
Net cash provided by
(used in) financing activities
|
5,358
|
|
|
(1,518)
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(1)
|
|
|
—
|
|
|
Net increase in cash,
cash equivalents and restricted cash
|
363
|
|
|
96
|
|
*
|
Cash, cash
equivalents and restricted cash at beginning of period
|
224
|
|
|
128
|
|
*
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
587
|
|
|
224
|
|
|
|
|
|
|
*
|
In the second quarter
of 2017, CenturyLink adopted Accounting Standards Update ("ASU")
2016-18, "Restricted Cash (a consensus of the FASB Emerging Issues
Task Force)" ("ASU 2016-18"), which requires that a statement of
cash flows explain the change in the total of cash, cash
equivalents and amounts generally described as restricted cash and
restricted cash equivalents as compared to the prior presentation,
which explained only the change in cash and cash equivalents. ASU
2016-18 is effective January 1, 2018, but early adoption is
permitted and requires retrospective application of the
requirements to all previous periods presented. This change
was applied on a retrospective basis to all previous periods to
match the current period presentation with immaterial
impact.
|
CenturyLink,
Inc.
|
SELECTED SEGMENT
FINANCIAL INFORMATION
|
THREE MONTHS AND
TWELVE MONTHS ENDED DECEMBER 31, 2017 AND 2016
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
December 31,
|
|
Twelve months
ended
December 31,
|
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Total segment
revenues
|
|
$
|
5,135
|
|
|
4,115
|
|
|
16,924
|
|
|
16,766
|
|
Total segment
expenses
|
|
2,818
|
|
|
2,248
|
|
|
9,390
|
|
|
9,081
|
|
Total segment
income
|
|
$
|
2,317
|
|
|
1,867
|
|
|
7,534
|
|
|
7,685
|
|
Total segment income
margin (segment income divided by segment revenues)
|
|
45.1
|
%
|
|
45.4
|
%
|
|
44.5
|
%
|
|
45.8
|
%
|
|
|
|
|
|
|
|
|
|
|
Business
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
3,734
|
|
|
2,630
|
|
|
11,220
|
|
|
10,704
|
|
Expenses
|
|
2,206
|
|
|
1,588
|
|
|
6,847
|
|
|
6,391
|
|
|
|
|
|
|
|
|
|
|
|
Segment
income
|
|
$
|
1,528
|
|
|
1,042
|
|
|
4,373
|
|
|
4,313
|
|
Segment income
margin
|
|
40.9
|
%
|
|
39.6
|
%
|
|
39.0
|
%
|
|
40.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Consumer
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,401
|
|
|
1,485
|
|
|
5,704
|
|
|
6,062
|
|
Expenses
|
|
612
|
|
|
660
|
|
|
2,543
|
|
|
2,690
|
|
|
|
|
|
|
|
|
|
|
|
Segment
income
|
|
$
|
789
|
|
|
825
|
|
|
3,161
|
|
|
3,372
|
|
Segment income
margin
|
|
56.3
|
%
|
|
55.6
|
%
|
|
55.4
|
%
|
|
55.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In January 2017,
CenturyLink implemented a new organization structure designed to
further strengthen its ability to attain our operational, strategic
and financial goals. Prior to this reorganization, CenturyLink
operated and reported as two segments, business and consumer. As a
result of this reorganization, CenturyLink changed the name of the
predecessor business segment to "enterprise" segment. Additionally,
CenturyLink also reassigned its information technology, managed
hosting, cloud hosting and hosting area network services from its
former business segment to a new non-reportable operating segment.
CenturyLink reported two segments, enterprise and consumer, from
January 2017 through October 2017.
|
|
|
|
In connection with
CenturyLink's acquisition of Level 3, CenturyLink implemented a new
organization structure and began managing its operations in two
segments: business and consumer. CenturyLink's consumer segment
remains substantially unchanged under this reorganization, and
CenturyLink's newly reorganized business segment includes the
legacy CenturyLink enterprise segment operations and the legacy
Level 3 operations. In addition, it reassigned its information
technology, managed hosting, cloud hosting and hosting area network
operations into the business segment from the former
non-reportable operating segment.
|
CenturyLink,
Inc.
|
NET DEBT TO LTM PRO
FORMA ADJUSTED EBITDA RATIO
|
AS OF DECEMBER 31,
2017
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
Net Debt to LTM
Pro Forma Adjusted EBITDA Ratio
|
|
|
|
Gross Debt
|
$
|
38,053
|
|
Cash and Cash
Equivalents
|
(551)
|
|
Net Debt
|
$
|
37,502
|
|
LTM Pro Forma
Adjusted EBITDA Excluding Acquisition-Related Expenses
|
$
|
8,698
|
|
Net Debt to LTM
Adjusted EBITDA Ratio
|
4.31
|
|
Gross Debt is defined as total long-term debt, less
unamortized discounts, premiums and other, net of
$23 million and unamortized debt
issuance costs of $350 million.
Net Debt to Last Twelve Months (LTM) Pro Forma Adjusted
EBITDA Ratio is defined as Gross Debt, reduced by cash and
cash equivalents and divided by LTM Pro Forma Adjusted EBITDA
Excluding Acquisition-Related Expenses.
Adjusted EBITDA is defined as operating income (loss) from the
Pro Forma Combined Company Results less depreciation and
amortization expense, non-cash impairment charges, non-cash stock
compensation expense and special items, excluding CenturyLink
colocation revenue and related estimated costs.
CenturyLink,
Inc.
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED)
|
(Dollars in
millions, except per share amounts and shares in
thousands)
|
|
|
|
|
|
Fourth Quarter
2017
|
|
|
Less
|
As
Adjusted
|
|
As
|
Special
|
excluding
|
|
Reported
|
Items
|
Special
Items
|
|
|
|
|
Net Income as
reported in Consolidated Statement of Income
|
$
|
1,117
|
|
(956)
|
|
161
|
|
Weighted Average
Shares Outstanding - Diluted
|
889,135
|
|
|
889,135
|
|
|
|
|
|
Diluted Earnings Per
Share
|
$
|
1.26
|
|
|
0.18
|
|
|
|
|
|
Special items
include:
|
|
|
|
Integration costs
related to CenturyLink's acquisition of Level 3
|
|
$
|
206
|
|
|
Interest income
related to Term Loan B Escrow account for
pre-acquisition
|
|
(4)
|
|
|
Interest expense
associated with Term Loan B for pre-acquisition
|
|
|
|
colocation
business
|
|
20
|
|
|
Income tax effect of
special items
|
|
(46)
|
|
|
Impact of Tax
Reform
|
|
(1,132)
|
|
|
|
|
$
|
(956)
|
|
|
Outlook
To enhance the information in our outlook with respect to
non-GAAP metrics, we are providing a range for certain GAAP
measures that are components of the reconciliation of the non-GAAP
metrics. The provision of these ranges is in no way meant to
indicate that CenturyLink is explicitly or implicitly providing an
outlook on those GAAP components of the reconciliation. In order to
reconcile the non-GAAP financial metric to GAAP, CenturyLink has to
use ranges for the GAAP components that arithmetically add up to
the non-GAAP financial metric. While CenturyLink feels reasonably
comfortable about the outlook for its non-GAAP financial metrics,
it fully expects that the ranges used for the GAAP components will
vary from actual results. We will consider our outlook of non-GAAP
financial metrics to be accurate if the specific non-GAAP metric is
met or exceeded, even if the GAAP components of the reconciliation
are different from those provided in an earlier reconciliation.
CenturyLink,
Inc.
|
2018
OUTLOOK
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
Adjusted EBITDA
Outlook
|
|
|
|
Twelve Months Ended
December 31, 2018
|
|
|
|
|
Range
|
|
Low
|
|
High
|
Net Income
|
$
|
320
|
|
|
720
|
|
Income Tax
Expense
|
120
|
|
|
240
|
|
Total Other
Expense
|
2,300
|
|
|
2,200
|
|
Depreciation and
Amortization Expense
|
5,500
|
|
|
5,400
|
|
Non-Cash Compensation
Expense
|
210
|
|
|
190
|
|
Integration-related
expenses
|
300
|
|
|
200
|
|
Adjusted
EBITDA
|
$
|
8,750
|
|
|
8,950
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
Outlook
|
|
|
|
Twelve Months Ended
December 31, 2018
|
|
|
|
|
Range
|
|
Low
|
|
High
|
Net Cash Provided by
Operating Activities excluding integration costs
|
$
|
7,050
|
|
|
7,150
|
|
Capital Expenditures,
excluding: integration projects
|
(3,900)
|
|
|
(3,800)
|
|
Free Cash
Flow
|
$
|
3,150
|
|
|
3,350
|
|
CENTURYLINK STANDALONE
DESCRIPTION OF NON-GAAP FINANCIAL MEASURES
To enable investors to track CenturyLink's results through the
end of 2017 on a basis that assumes CenturyLink did not acquire
Level 3, we are providing selected unaudited results in the format
previously used.
We use the term Special items as a non-GAAP measure to
describe items that impacted a period's net income and the
statement of operations for which investors may want to give
special consideration due to their magnitude, nature or both. We do
not use the term non-recurring because while some of these
items are special because they are unusual and infrequent, others
may recur in future periods.
We use Adjusted Earnings before interest, taxes, depreciation
and amortization or the term Adjusted EBITDA as a non-GAAP
measure to show profitability in our continuing, central business
activities, without regard for the effects of special items,
capital structure or tax structure, which may be helpful in
analyzing trends or making comparisons to other companies that have
different capital or tax structures. Other companies may
refer to this measure using the term Operating income before
depreciation and amortization (OIBDA). Adjusted EBITDA is
an accrual based measure that has the effect of excluding
quarter-to-quarter variances that are caused by changes in working
capital. Adjusted EBITDA does not represent the residual
cash flow available for discretionary expenditures, as mandatory
debt service requirements and other non-discretionary expenditures
are not deducted from the measure. It is also not intended to be
used as a replacement for the GAAP measures of Operating
income or Cash flows provided by operating activities.
Rather it is intended to provide additional information to enhance
the understanding of CenturyLink's GAAP financial information, and
it should be considered by investors in addition to, but not in
substitution for, the GAAP measures.
CenturyLink
Standalone
|
REVENUES
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
|
|
December 31,
2017
|
|
December 31,
2016
|
|
December 31,
2017
|
|
December 31,
2016
|
Strategic services
*
|
|
|
|
|
|
|
|
|
|
Enterprise
high-bandwidth data services (1)
|
|
$
|
773
|
|
|
755
|
|
|
3,069
|
|
|
2,990
|
|
|
Other enterprise
strategic services (2)
|
|
181
|
|
|
331
|
|
|
916
|
|
|
1,320
|
|
|
IT and managed
services (3)
|
|
169
|
|
|
158
|
|
|
652
|
|
|
641
|
|
|
Consumer broadband
services (4)
|
|
688
|
|
|
666
|
|
|
2,683
|
|
|
2,689
|
|
|
Other consumer
strategic services (5)
|
|
94
|
|
|
118
|
|
|
405
|
|
|
458
|
|
|
Total strategic
services revenues
|
|
1,905
|
|
|
2,028
|
|
|
7,725
|
|
|
8,098
|
|
|
|
|
|
|
|
|
|
|
Legacy services
*
|
|
|
|
|
|
|
|
|
|
Enterprise voice
services (6)
|
|
533
|
|
|
579
|
|
|
2,215
|
|
|
2,413
|
|
|
Enterprise
low-bandwidth data services (7)
|
|
274
|
|
|
325
|
|
|
1,179
|
|
|
1,381
|
|
|
Other enterprise
legacy services (8)
|
|
241
|
|
|
266
|
|
|
995
|
|
|
1,075
|
|
|
Consumer voice
services (6)
|
|
513
|
|
|
589
|
|
|
2,191
|
|
|
2,443
|
|
|
Other consumer legacy
services (9)
|
|
72
|
|
|
75
|
|
|
288
|
|
|
312
|
|
|
Total legacy services
revenues
|
|
1,633
|
|
|
1,834
|
|
|
6,868
|
|
|
7,624
|
|
|
|
|
|
|
|
|
|
|
|
Data
integration
|
|
|
|
|
|
|
|
|
Enterprise
data integration
|
|
109
|
|
|
130
|
|
|
479
|
|
|
528
|
|
IT and managed
services data integration
|
|
4
|
|
|
—
|
|
|
18
|
|
|
3
|
|
Consumer data
integration
|
|
—
|
|
|
1
|
|
|
1
|
|
|
2
|
|
Total data
integration revenues
|
|
113
|
|
|
131
|
|
|
498
|
|
|
533
|
|
|
|
|
|
|
|
|
|
|
Other
revenues
|
|
|
|
|
|
|
|
|
High-cost
support revenue (10)
|
|
166
|
|
|
170
|
|
|
667
|
|
|
688
|
|
Other revenue
(11)
|
|
147
|
|
|
126
|
|
|
539
|
|
|
527
|
|
Total other
revenues
|
|
313
|
|
|
296
|
|
|
1,206
|
|
|
1,215
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
$
|
3,964
|
|
|
4,289
|
|
|
16,297
|
|
|
17,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes MPLS,
Ethernet and wavelength revenue
|
(2)
|
Includes primarily
colocation, broadband, VOIP, video and fiber lease
revenue
|
(3)
|
Includes primarily IT
services, managed hosting, cloud hosting and hosting area network
revenue
|
(4)
|
Includes broadband
and related services revenue
|
(5)
|
Includes video and
other revenue
|
(6)
|
Includes local and
long-distance voice revenue
|
(7)
|
Includes private line
(including special access) revenue
|
(8)
|
Includes UNEs, public
access, switched access and other ancillary revenue
|
(9)
|
Includes other
ancillary revenue
|
(10)
|
Includes CAF Phase 1,
CAF Phase 2 and federal and state USF support revenue
|
(11)
|
Includes USF
surcharges and failed-sale-leaseback rental income
|
*
|
During the second
quarter of 2017, CenturyLink determined that certain of its legacy
services, specifically its dark fiber network leasing, are more
closely aligned with CenturyLink's strategic services than with its
legacy services. As a result, CenturyLink now reflects these
operating revenues as strategic services, and CenturyLink has
reclassified certain prior period amounts to conform to this
change. The revision resulted in an increase of revenue from
strategic services and a corresponding decrease in revenue from
legacy services of $12 million and $48 million for the three and
twelve months ended December 31, 2016,
respectively.
|
CenturyLink
Standalone
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
December 31, 2017
|
|
Three months ended
December 31, 2016
|
|
|
|
|
|
|
As
adjusted
|
|
|
|
|
|
As
adjusted
|
|
|
|
|
Less
|
|
excluding
|
|
|
|
Less
|
|
excluding
|
|
|
As
|
|
special
|
|
special
|
|
As
|
|
special
|
|
special
|
|
|
reported
|
|
items
|
|
items
|
|
reported
|
|
items
|
|
items
|
Adjusted EBITDA
and adjusted EBITDA margin
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
*
|
$
|
524
|
|
|
(206)
|
|
(1)
|
730
|
|
|
405
|
|
|
(186)
|
|
(3)
|
591
|
|
|
Add: Depreciation and
amortization
|
1,197
|
|
|
—
|
|
|
1,197
|
|
|
958
|
|
|
(36)
|
|
(4)
|
994
|
|
|
Less: Operating
revenues from Level 3
|
(1,406)
|
|
|
—
|
|
|
(1,406)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Add: Operating
expenses less depreciation and amortization from Level 3
|
943
|
|
|
28
|
|
(2)
|
915
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Add: Affiliate
eliminations
|
47
|
|
|
|
|
47
|
|
|
|
|
|
|
|
|
Less: CenturyLink
expenses billed from Level 3
|
(12)
|
|
|
|
|
(12)
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
1,293
|
|
|
(178)
|
|
|
1,471
|
|
|
1,363
|
|
|
(222)
|
|
|
1,585
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
5,323
|
|
|
—
|
|
|
5,323
|
|
|
4,289
|
|
|
—
|
|
|
4,289
|
|
|
Less: Revenues from
Level 3
|
(1,406)
|
|
|
—
|
|
|
(1,406)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Add: Affiliate
eliminations
|
47
|
|
|
|
|
47
|
|
|
|
|
|
|
|
|
Revenues less Level
3
|
$
|
3,964
|
|
|
—
|
|
|
3,964
|
|
|
4,289
|
|
|
—
|
|
|
4,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin (adjusted EBITDA divided by revenues)
|
32.6
|
%
|
|
|
|
37.1
|
%
|
|
31.8
|
%
|
|
|
|
37.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPECIAL
ITEMS
|
|
|
|
|
|
|
|
|
|
|
(1) -
|
Acquisition and
integration costs associated with CenturyLink's acquisition of
Level 3 ($178 million) incurred by CenturyLink and ($28 million) in
transaction costs incurred by Level 3.
|
(2) -
|
Transaction costs
incurred by Level 3 of $28 million.
|
(3) -
|
Includes severance
costs associated with reduction in force initiatives ($148
million), integration costs associated with CenturyLink's
acquisition of Qwest ($2 million), costs associated with a large
billing system integration project ($2 million), costs related to
our pending acquisition of Level 3 ($52 million), costs associated
with our pending sale of the colocation business $7 million) and
the impairment of a building ($11 million), offset by the
termination of depreciation expense related to CenturyLink's
pending sale of the colocation business $36 million.
|
(4) -
|
Termination of
depreciation and amortization expense related to our sale of the
colocation business ($36 million).
|
*
|
In the first quarter
of 2017, CenturyLink adopted ASU 2017-07, "Improving the
Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost" ("ASU 2017-07"). ASU 2017-07 modified
the presentation of net periodic pension and postretirement benefit
costs and requires the service cost component to be reported
separately from the other components in order to provide more
useful information. Under ASU 2017-07, the service cost component
of net periodic pension and postretirement benefit costs is
required to be presented in the same expense category as the
related salary and wages for the employee. The other components of
the net periodic pension and postretirement benefit costs are
required to be recognized below operating income in other (expense)
income, net in CenturyLink's consolidated statements of operations.
This change was applied on a retrospective basis to all previous
periods to match the current period presentation. This
retrospective application resulted in a $13 million increase in
operating income and a corresponding increase in total other
expense, net for the three months ended December 31,
2016.
|
CenturyLink
Standalone
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months
ended December 31, 2017
|
|
Twelve months
ended December 31, 2016
|
|
|
|
|
|
|
As
adjusted
|
|
|
|
|
|
As
adjusted
|
|
|
|
|
Less
|
|
excluding
|
|
|
|
Less
|
|
excluding
|
|
|
As
|
|
special
|
|
special
|
|
As
|
|
special
|
|
special
|
|
|
reported
|
|
items
|
|
items
|
|
reported
|
|
items
|
|
items
|
Adjusted EBITDA
and adjusted EBITDA margin
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
*
|
$
|
2,009
|
|
|
(347)
|
|
(1)
|
2,356
|
|
|
2,333
|
|
|
(228)
|
|
(4)
|
2,561
|
|
|
Add: Depreciation and
amortization
|
3,936
|
|
|
(6)
|
|
(2)
|
3,942
|
|
|
3,916
|
|
|
(36)
|
|
(5)
|
3,952
|
|
|
Less: Operating
revenues from Level 3
|
(1,406)
|
|
|
—
|
|
|
(1,406)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Add: Operating
expenses less depreciation and amortization from Level 3
|
943
|
|
|
28
|
|
(3)
|
915
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Add: Affiliate
eliminations
|
47
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Less: CenturyLink
expenses billed from Level 3
|
(12)
|
|
|
—
|
|
|
(12)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Adjusted
EBITDA
|
$
|
5,517
|
|
|
(325)
|
|
|
5,842
|
|
|
6,249
|
|
|
(264)
|
|
|
6,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
17,656
|
|
|
—
|
|
|
17,656
|
|
|
17,470
|
|
|
—
|
|
|
17,470
|
|
|
Less: Revenues from
Level 3
|
(1,406)
|
|
|
—
|
|
|
(1,406)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Add: Affiliate
eliminations
|
47
|
|
|
—
|
|
|
47
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Revenues less Level
3
|
$
|
16,297
|
|
|
|
—
|
|
|
16,297
|
|
|
17,470
|
|
|
—
|
|
|
17,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
margin (adjusted EBITDA divided by revenues)
|
33.9
|
%
|
|
|
|
35.8
|
%
|
|
35.8
|
%
|
|
|
|
37.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SPECIAL
ITEMS
|
|
|
|
|
|
|
|
|
(1) -
|
Acquisition and
integration costs associated with CenturyLink's acquisition of
Level 3 ($243 million) incurred by CenturyLink and ($28 million) in
transaction costs incurred by Level 3, a loss associated with the
sale of CenturyLink's data centers and colocation business ($82
million), partially offset by the termination of depreciation and
amortization expense related to CenturyLink's sale of the data
centers and colocation business $50 million, which were
substantially offset by additional depreciation expense adjustment
recorded on real estate assets CenturyLink was required to reflect
on its balance sheet as a result of not meeting the requirement of
sale leaseback accounting ($44 million).
|
(2) -
|
Termination of
depreciation and amortization expense related to CenturyLink's sale
of the data centers and colocation business ($50 million), which
were substantially offset by additional depreciation expense
adjustment recorded of $44 million on real estate assets
CenturyLink was required to reflect on its balance sheet as a
result of not meeting the requirement of sale leaseback
accounting.
|
(3) -
|
Transaction costs
incurred by Level 3 of $28 million.
|
(4) -
|
Includes severance
costs associated with reduction in force initiatives ($173
million), integration costs associated with CenturyLink's
acquisition of Qwest ($10 million) and costs associated with a
large billing system integration project ($15 million), less an
offsetting gain on the sale of a building $4 million.
|
(5) -
|
Termination of
depreciation and amortization expense related to our sale of the
colocation business ($36 million).
|
|
|
*
|
In the first quarter
of 2017, CenturyLink adopted ASU 2017-07, "Improving the
Presentation of Net Periodic Pension Cost and Net Periodic
Postretirement Benefit Cost" ("ASU 2017-07"). ASU 2017-07 modified
the presentation of net periodic pension and postretirement benefit
costs and requires the service cost component to be reported
separately from the other components in order to provide more
useful information. Under ASU 2017-07, the service cost component
of net periodic pension and postretirement benefit costs is
required to be presented in the same expense category as the
related salary and wages for the employee. The other components of
the net periodic pension and postretirement benefit costs are
required to be recognized in other (expense) income, net in
CenturyLink's consolidated statements of operations. This change
was applied on a retrospective basis to all previous periods to
match the current period presentation. This retrospective
application resulted in a $2 million increase in operating income
and a corresponding increase in total other expense, net for the
twelve months ended December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CenturyLink
Standalone
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
Fourth
Quarter
|
|
Fourth
Quarter
|
|
Full
Year
|
|
Full
Year
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Consolidated payments
for property, plant and equipment and software
|
$
|
743
|
|
|
971
|
|
|
3,106
|
|
|
2,981
|
|
|
|
|
|
|
|
|
|
Less Two Months Level
3 capital expenditures
|
(207)
|
|
|
—
|
|
|
(207)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
for CenturyLink Standalone
|
536
|
|
|
971
|
|
|
2,899
|
|
|
2,981
|
|
|
|
|
|
|
|
|
|
Less Capital
expenditures related to integration of Qwest and Level 3
|
(8)
|
|
|
(8)
|
|
|
(13)
|
|
|
(23)
|
|
|
|
|
|
|
|
|
|
Capital expenditures
excluding integration of Qwest and Level 3
|
$
|
528
|
|
|
963
|
|
|
2,886
|
|
|
2,958
|
|
|
|
|
|
|
|
|
|
CenturyLink
Standalone
|
OPERATING
METRICS
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
As
of
|
|
As
of
|
|
|
|
December 31,
2017
|
|
September 30,
2017
|
|
December 31,
2016
|
|
|
|
|
|
|
|
|
|
|
|
(In
thousands)
|
Operating
Metrics
|
|
|
|
|
|
|
Broadband
subscribers
|
|
5,662
|
|
|
5,767
|
|
|
5,945
|
|
Access
lines
|
|
10,282
|
|
|
10,506
|
|
|
11,090
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CenturyLink's
methodology for counting broadband subscribers and access lines may
not be comparable to those of other companies.
|
Level 3 Standalone
Description of Non-GAAP Metrics
To enable investors to track Level 3's results through the end
of 2017 on a basis that assumes CenturyLink did not acquire Level
3, we are providing selected unaudited results in the format
previously used.
Pursuant to Regulation G, the company is hereby providing
definitions of non-GAAP financial metrics and reconciliations to
the most directly comparable GAAP measures.
The following describes and reconciles those financial measures
as reported under accounting principles generally accepted in
the United States (GAAP) with
those financial measures as adjusted by the items detailed below
and presented in the accompanying news release. These calculations
are not prepared in accordance with GAAP and should not be viewed
as alternatives to GAAP. In keeping with its historical financial
reporting practices, the company believes that the supplemental
presentation of these calculations provides meaningful non-GAAP
financial measures to help investors understand and compare
business trends among different reporting periods on a consistent
basis.
In addition, measures referred to in the accompanying news
release as being calculated "on a constant currency basis" or "in
constant currency terms" are non-GAAP metrics intended to present
the relevant information assuming a constant exchange rate between
the two periods being compared. Such metrics are calculated by
applying the currency exchange rates used in the preparation of the
prior period financial results to the subsequent period
results.
Core Network Services Revenue includes revenue from
colocation and datacenter services, transport and fiber, IP and
data services, and voice services (local and enterprise).
Network Access Costs includes leased capacity,
right-of-way costs, access charges, satellite transponder lease
costs and other third party costs directly attributable to
providing access to customer locations from the Level 3 network,
but excludes Network Related Expenses, and depreciation and
amortization. Network Access Costs do not include any employee
expenses or impairment expenses; these expenses are allocated to
Network Related Expenses or Selling, General and Administrative
Expenses.
Network Related Expenses includes certain expenses
associated with the delivery of services to customers and the
operation and maintenance of the Level 3 network, such as facility
rent, utilities, maintenance and other costs, each related to the
operation of its communications network, as well as salaries, wages
and related benefits (including non-cash share-based compensation
expenses) associated with personnel who are responsible for the
delivery of services, operation and maintenance of its
communications network, and accretion expense on asset retirement
obligations, but excludes depreciation and amortization.
Network Access Margin ($) is defined as total Revenue
less Network Access Costs from the Statements of Income, and
excludes Network Related Expenses.
Network Access Margin (%) is defined as Network Access
Margin ($) divided by total Revenue. Management believes that
network access margin is a relevant metric to provide to investors,
as it is a metric that management uses to measure the margin
available to Level 3 after it pays third party network services
costs; in essence, a measure of the efficiency of Level 3's
network.
Adjusted EBITDA ($) is defined as net income (loss) from
the Statements of Income before income tax (expense) benefit, total
other income (expense), non-cash impairment charges, depreciation
and amortization and non-cash stock compensation expense.
Adjusted EBITDA Margin (%) is defined as Adjusted EBITDA
divided by total revenue.
Management believes that Adjusted EBITDA and Adjusted EBITDA
Margin are relevant and useful metrics to provide to investors, as
they are an important part of Level 3's internal reporting and are
key measures used by Management to evaluate profitability and
operating performance of Level 3 and to make resource allocation
decisions. Management believes such measures are especially
important in a capital-intensive industry such as
telecommunications. Management also uses Adjusted EBITDA and
Adjusted EBITDA Margin (and similarly uses these terms excluding
acquisition-related expenses) to compare Level 3's performance to
that of its competitors and to eliminate certain non-cash and
non-operating items in order to consistently measure from period to
period its ability to fund capital expenditures, fund growth,
service debt and determine bonuses. Adjusted EBITDA excludes
non-cash impairment charges and non-cash stock compensation expense
because of the non-cash nature of these items. Adjusted EBITDA also
excludes interest income, interest expense and income taxes because
these items are associated with Level 3's capitalization and tax
structures. Adjusted EBITDA also excludes depreciation and
amortization expense because these non-cash expenses primarily
reflect the impact of historical capital investments, as opposed to
the cash impacts of capital expenditures made in recent periods,
which may be evaluated through cash flow measures. Adjusted
EBITDA excludes the gain (or loss) on extinguishment and
modification of debt and other, net because these items are not
related to the primary operations of Level 3.
There are limitations to using Adjusted EBITDA as a financial
measure, including the difficulty associated with comparing
companies that use similar performance measures whose calculations
may differ from Level 3's calculations. Additionally, this
financial measure does not include certain significant items such
as interest income, interest expense, income taxes, depreciation
and amortization, non-cash impairment charges, non-cash stock
compensation expense, the gain (or loss) on extinguishment and
modification of debt and net other income (expense). Adjusted
EBITDA and Adjusted EBITDA Margin (either with or without
acquisition-related expense adjustments) should not be considered a
substitute for other measures of financial performance reported in
accordance with GAAP.
Unlevered Cash Flow is defined as net cash provided by
(used in) operating activities less capital expenditures, plus cash
interest paid and less interest income all as disclosed in the
Statements of Cash Flows or the Statements of Income. Management
believes that Unlevered Cash Flow is a relevant metric to provide
to investors, as it is an indicator of the operational strength and
performance of Level 3 and, measured over time, provides management
and investors with a sense of the underlying business' growth
pattern and ability to generate cash. Unlevered Cash Flow
excludes cash used for acquisitions and debt service and the impact
of exchange rate changes on cash and cash equivalents balances.
There are material limitations to using Unlevered Cash Flow to
measure Level 3's cash performance as it excludes certain material
items such as payments on and repurchases of long-term debt,
interest income, cash interest expense and cash used to fund
acquisitions. Comparisons of Level 3's Unlevered Cash Flow to that
of some of its competitors may be of limited usefulness since Level
3 does not currently pay a significant amount of income taxes due
to net operating loss carryforwards, and therefore, generates
higher cash flow than a comparable business that does pay income
taxes. Additionally, this financial measure is subject to
variability quarter over quarter as a result of the timing of
payments related to accounts receivable and accounts payable and
capital expenditures. Unlevered Cash Flow should not be used as a
substitute for net change in cash and cash equivalents in the
Consolidated Statements of Cash Flows.
Free Cash Flow is defined as net cash provided by (used
in) operating activities less capital expenditures as disclosed in
the Statements of Cash Flows. Management believes that Free Cash
Flow is a relevant metric to provide to investors, as it is an
indicator of the Level 3's ability to generate cash to service its
debt. Free Cash Flow excludes cash used for acquisitions, principal
repayments and the impact of exchange rate changes on cash and cash
equivalents balances.
There are material limitations to using Free Cash Flow to
measure Level 3's performance as it excludes certain material items
such as principal payments on and repurchases of long-term debt and
cash used to fund acquisitions. Comparisons of Level 3's Free Cash
Flow to that of some of its competitors may be of limited
usefulness since Level 3 does not currently pay a significant
amount of income taxes due to net operating loss carryforwards, and
therefore, generates higher cash flow than a comparable business
that does pay income taxes. Additionally, this financial measure is
subject to variability quarter over quarter as a result of the
timing of payments related to interest expense, accounts receivable
and accounts payable and capital expenditures. Free Cash Flow
should not be used as a substitute for net change in cash and cash
equivalents on the Consolidated Statements of Cash Flows.
Level 3
Standalone
|
FINANCIAL
RESULTS
|
THREE MONTHS ENDED
DECEMBER 31, 2017 AND 2016
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
Three months ended
December 31,
|
|
|
2017
|
|
2016
(1)
|
|
|
|
|
|
Core Network Services
Revenue
|
$
|
2,017
|
|
|
1,933
|
|
Wholesale Voice
Services Revenue
|
93
|
|
|
99
|
|
|
Total
Revenue
|
2,110
|
|
|
2,032
|
|
Network Access
Costs
|
724
|
|
|
680
|
|
Network Access
Margin
|
65.7
|
%
|
|
66.5
|
%
|
Network Related
Expenses (NRE) (2)(7)
|
335
|
|
|
327
|
|
Selling, General
& Administrative Expenses (SG&A) (2)
|
387
|
|
|
316
|
|
Non-cash Compensation
Expense
|
32
|
|
|
35
|
|
Adjusted EBITDA
(3)
|
664
|
|
|
709
|
|
Adjusted EBITDA,
excluding acquisition-related expenses (3)
(4)
|
758
|
|
|
724
|
|
Adjusted EBITDA
Margin (3)
|
31.5
|
%
|
|
34.9
|
%
|
Adjusted EBITDA
Margin, excluding acquisition-related expenses (3)
(4)
|
35.9
|
%
|
|
35.6
|
%
|
Cash Flows from
Operating Activities (5)
|
431
|
|
|
557
|
|
Capital
Expenditures
|
308
|
|
|
306
|
|
Capital Expenditures,
excluding acquisition-related capital expenditures
(6)
|
301
|
|
|
306
|
|
Unlevered Cash Flow
(3)
|
221
|
|
|
386
|
|
Unlevered Cash Flow,
excluding cash acquisition-related expenses (3) (4)
(5)
|
451
|
|
|
401
|
|
Free Cash Flow
(3)
|
123
|
|
|
251
|
|
Free Cash Flow,
excluding cash acquisition-related expenses (3)
(5)
|
353
|
|
|
266
|
|
Net Income
|
74
|
|
|
250
|
|
|
|
|
|
|
(1) -
|
The reported fourth
quarter 2016 results have been adjusted to reflect changes made to
customer assignments between the wholesale and enterprise channels
as of the beginning of 2017.
|
(2) -
|
Excludes non-cash
compensation expense.
|
(3) -
|
See schedule of
non-GAAP metrics for definitions and reconciliation to GAAP
measures.
|
(4) -
|
In the fourth quarter
2017, acquisition-related expenses were $87 million and $15 million
in fourth quarter 2016. In the fourth quarter 2017, 401K matching
contributions of $7 million were funded with cash under the
CenturyLink plan
|
(5) -
|
In the fourth quarter
2017, cash paid for acquisition-related expenses was $223 million
and $15 million in fourth quarter 2016.
|
(6) -
|
In the fourth quarter
2017, acquisition-related capital expenditures were $7
million.
|
(7) -
|
Included in cost of
services and products in statements of income to conform to
CentruyLink presention.
|
Level 3
Standalone
|
QUARTERLY CONSTANT
CURRENCY
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4Q16
FX
|
3Q17
FX
|
|
|
|
|
4Q16
FX
|
|
3Q17
FX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4Q17
Constant
Currency
|
|
|
|
|
4Q17/
4Q16
%
Change
|
4Q17
Constant
Currency/
4Q16
%
Change(3)
|
4Q17/
3Q17
%
Change
|
4Q17
Constant
Currency/
3Q17
%
Change(3)
|
|
|
4Q17
|
4Q17
Constant
Currency
|
4Q16(2)
|
3Q17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
1,644
|
|
1,644
|
|
1,644
|
|
1,584
|
|
1,597
|
|
|
3.8
|
%
|
3.8
|
%
|
2.9
|
%
|
2.9
|
%
|
|
Wholesale
|
399
|
|
399
|
|
399
|
|
405
|
|
404
|
|
|
(1.5)
|
%
|
(1.5)
|
%
|
(1.2)
|
%
|
(1.2)
|
%
|
|
Enterprise
|
1,245
|
|
1,245
|
|
1,245
|
|
1,179
|
|
1,193
|
|
|
5.6
|
%
|
5.6
|
%
|
4.4
|
%
|
4.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
$
|
188
|
|
180
|
|
187
|
|
179
|
|
184
|
|
|
5.0
|
%
|
0.6
|
%
|
2.2
|
%
|
1.7
|
%
|
|
Wholesale
|
57
|
|
54
|
|
57
|
|
55
|
|
57
|
|
|
3.6
|
%
|
(2.1)
|
%
|
—
|
%
|
0.5
|
%
|
|
Enterprise
|
118
|
|
114
|
|
117
|
|
108
|
|
113
|
|
|
9.3
|
%
|
5.3
|
%
|
4.4
|
%
|
3.7
|
%
|
|
UK Govt
|
13
|
|
12
|
|
13
|
|
16
|
|
14
|
|
|
(18.8)
|
%
|
(22.3)
|
%
|
(7.1)
|
%
|
(8.9)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Latin
America
|
$
|
185
|
|
184
|
|
186
|
|
170
|
|
182
|
|
|
8.8
|
%
|
8.0
|
%
|
1.6
|
%
|
2.3
|
%
|
|
Wholesale
|
33
|
|
33
|
|
34
|
|
34
|
|
35
|
|
|
(2.9)
|
%
|
(3.6)
|
%
|
(5.7)
|
%
|
(3.4)
|
%
|
|
Enterprise
|
152
|
|
151
|
|
152
|
|
136
|
|
147
|
|
|
11.8
|
%
|
11.0
|
%
|
3.4
|
%
|
3.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total CNS
Revenue
|
$
|
2,017
|
|
2,008
|
|
2,017
|
|
1,933
|
|
1,963
|
|
|
4.3
|
%
|
3.8
|
%
|
2.8
|
%
|
2.8
|
%
|
|
Wholesale
|
489
|
|
486
|
|
490
|
|
494
|
|
496
|
|
|
(1.0)
|
%
|
(1.8)
|
%
|
(1.4)
|
%
|
(1.1)
|
%
|
|
Enterprise
(1)
|
1,528
|
|
1,522
|
|
1,527
|
|
1,439
|
|
1,467
|
|
|
6.2
|
%
|
5.7
|
%
|
4.2
|
%
|
4.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total CNS
Revenue
|
$
|
2,017
|
|
2,008
|
|
2,017
|
|
1,933
|
|
1,963
|
|
|
4.3
|
%
|
3.8
|
%
|
2.8
|
%
|
2.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale Voice
Services
|
93
|
|
93
|
|
93
|
|
99
|
|
96
|
|
|
(6.1)
|
%
|
(5.6)
|
%
|
(3.1)
|
%
|
(3.6)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total
Revenues
|
$
|
2,110
|
|
2,101
|
|
2,110
|
|
2,032
|
|
2,059
|
|
|
3.8
|
%
|
3.3
|
%
|
2.5
|
%
|
2.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Enterprise CNS
Revenue, excluding UK Government revenue
|
$
|
1,515
|
|
1,510
|
|
1,514
|
|
1,423
|
|
1,453
|
|
|
6.5
|
%
|
6.0
|
%
|
4.3
|
%
|
4.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Includes EMEA UK
Government revenue.
|
|
|
|
|
|
|
(2)
|
The 2016 results have
been adjusted to reflect changes made to customer assignments
between the wholesale and enterprise channels as of the beginning
of 2017.
|
|
(3)
|
Percentages are
calculated using whole numbers. Minor differences may exist due to
rounding.
|
|
Level 3
Standalone
|
Adjusted EBITDA
Metric
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuals
|
|
|
|
|
|
|
|
Predecessor
|
|
Successor
|
|
|
|
|
|
|
|
|
One month
ended
October 31,
2017
|
|
Two months
ended
December 31,
2017
|
|
Less
Adjustments
|
|
Combined
Predecessor
Successor
4Q17
|
|
Actuals
4Q16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
19
|
|
|
(141)
|
|
|
(196)
|
|
|
74
|
|
|
250
|
|
Income tax (benefit)
expense
|
53
|
|
|
234
|
|
|
179
|
|
|
108
|
|
|
(33)
|
|
Total other
expense
|
41
|
|
|
65
|
|
|
(10)
|
|
|
116
|
|
|
137
|
|
Depreciation and
Amortization
|
104
|
|
|
282
|
|
|
52
|
|
|
334
|
|
|
320
|
|
Non-Cash Stock
Compensation
|
12
|
|
|
26
|
|
|
6
|
|
|
32
|
|
|
35
|
|
Adjusted
EBITDA
|
229
|
|
|
466
|
|
|
31
|
|
|
664
|
|
|
709
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related Expenses
|
12
|
|
|
28
|
|
|
(47)
|
|
|
87
|
|
|
15
|
|
401(k) cash matching
contributions
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
Adjusted EBITDA
excluding acquisition- related expenses
|
$
|
241
|
|
|
501
|
|
|
(16)
|
|
|
758
|
|
|
724
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Network Service
Revenue
|
$
|
669
|
|
|
1,346
|
|
|
(2)
|
|
|
2,017
|
|
|
1,933
|
|
Wholesale Voice
Services and Other Revenue
|
32
|
|
|
61
|
|
|
—
|
|
|
93
|
|
|
99
|
|
Total
Revenue
|
$
|
701
|
|
|
1,407
|
|
|
(2)
|
|
|
2,110
|
|
|
2,032
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
32.7
|
%
|
|
33.1
|
%
|
|
|
|
31.5
|
%
|
|
34.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(excluding acquisition related expenses) Margin
|
34.4
|
%
|
|
35.6
|
%
|
|
|
|
35.9
|
%
|
|
35.6
|
%
|
Level 3
Standalone
|
Adjusted EBITDA
Metric
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuals
|
|
|
|
|
|
|
|
Predecessor
|
|
Successor
|
|
|
|
|
|
|
|
|
Ten months
ended
October 31,
2017
|
|
Two months
ended
December 31,
2017
|
|
Less
Adjustments
|
|
Combined
Predecessor
Successor
FY 2017
|
|
Actuals
FY 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
425
|
|
|
(141)
|
|
|
(196)
|
|
|
480
|
|
|
677
|
|
Income tax (benefit)
expense
|
268
|
|
|
234
|
|
|
179
|
|
|
323
|
|
|
165
|
|
Total other
expense
|
458
|
|
|
65
|
|
|
(17)
|
|
|
540
|
|
|
602
|
|
Depreciation and
Amortization
|
1,030
|
|
|
282
|
|
|
(5)
|
|
|
1,317
|
|
|
1,250
|
|
Non-Cash Stock
Compensation
|
132
|
|
|
26
|
|
|
6
|
|
|
152
|
|
|
156
|
|
Adjusted
EBITDA
|
2,313
|
|
|
466
|
|
|
(33)
|
|
|
2,812
|
|
|
2,850
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-Related
Expenses
|
85
|
|
|
28
|
|
|
(47)
|
|
|
160
|
|
|
15
|
|
401(k) cash matching
contributions
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
Adjusted EBITDA
excluding acquisition related expenses
|
$
|
2,398
|
|
|
501
|
|
|
(80)
|
|
|
2,979
|
|
|
2,865
|
|
|
|
|
|
|
|
|
|
|
|
|
Core Network Service
Revenue
|
$
|
6,543
|
|
|
1,346
|
|
|
(2)
|
|
|
7,891
|
|
|
7,764
|
|
Wholesale Voice
Services and Other Revenue
|
327
|
|
|
61
|
|
|
1
|
|
|
387
|
|
|
408
|
|
Total
Revenue
|
$
|
6,870
|
|
|
1,407
|
|
|
(1)
|
|
|
8,278
|
|
|
8,172
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
Margin
|
33.7
|
%
|
|
33.1
|
%
|
|
|
|
34.0
|
%
|
|
34.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(excluding acquisition related expenses) Margin
|
34.9
|
%
|
|
35.6
|
%
|
|
|
|
36.0
|
%
|
|
35.1
|
%
|
Level 3
Standalone
|
Cash Flows
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuals
|
|
|
|
|
|
|
|
Predecessor
|
|
Successor
|
|
|
|
|
|
|
|
|
One month
ended
October 31,
2017
|
|
Two months
ended
December 31,
2017
|
|
Less
Adjustments
|
|
Combined
Predecessor
Successor
4Q17
|
|
Actuals
4Q16
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
Investing Activities
|
$
|
(101)
|
|
|
(2,032)
|
|
|
—
|
|
|
(2,133)
|
|
|
(303)
|
|
Net cash used in
Financing Activities
|
$
|
—
|
|
|
(251)
|
|
|
—
|
|
|
(251)
|
|
|
(2)
|
|
Net cash provided by
Operating Activities
|
$
|
123
|
|
|
308
|
|
|
—
|
|
|
431
|
|
|
557
|
|
Capital
Expenditures
|
(101)
|
|
|
(207)
|
|
|
—
|
|
|
(308)
|
|
|
(306)
|
|
Free Cash
Flow
|
22
|
|
|
101
|
|
|
—
|
|
|
123
|
|
|
251
|
|
Cash Interest
paid
|
56
|
|
|
56
|
|
|
—
|
|
|
112
|
|
|
136
|
|
Interest
Income
|
(2)
|
|
|
(12)
|
|
|
—
|
|
|
(14)
|
|
|
(1)
|
|
Unlevered Cash
Flow
|
$
|
76
|
|
|
145
|
|
|
—
|
|
|
221
|
|
|
386
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
$
|
22
|
|
|
101
|
|
|
—
|
|
|
123
|
|
|
251
|
|
Add back: Cash
Acquisition-Related Expenses
|
14
|
|
|
162
|
|
|
(47)
|
|
|
223
|
|
|
15
|
|
Add back: 401(k) cash
funding
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
|
Free Cash Flow
Excluding Cash Acquisition-Related Expenses
|
$
|
36
|
|
|
270
|
|
|
(47)
|
|
|
353
|
|
|
266
|
|
|
|
|
|
|
|
|
|
|
|
Unlevered Cash
Flow
|
$
|
76
|
|
|
145
|
|
|
—
|
|
|
221
|
|
|
386
|
|
Add back: Cash
Acquisition-Related Expenses
|
14
|
|
|
162
|
|
|
(47)
|
|
|
223
|
|
|
15
|
|
Add back: 401(k) cash
funding
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
Unlevered Cash Flow
Excluding Cash Acquisition-Related Expenses
|
$
|
90
|
|
|
314
|
|
|
(47)
|
|
|
451
|
|
|
401
|
|
Level 3
Standalone
|
Cash Flows
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actuals
|
|
|
|
|
|
|
|
Predecessor
|
|
Successor
|
|
|
|
|
|
|
|
|
Ten months
ended
October 31,
2017
|
|
Two months
ended
December 31,
2017
|
|
Less
Adjustments
|
|
Combined
Predecessor
Successor
FY 2017
|
|
Actuals
FY 2016
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in
Investing Activities
|
$
|
(1,114)
|
|
|
(2,032)
|
|
|
—
|
|
|
(3,146)
|
|
|
(1,319)
|
|
Net cash used in
Financing Activities
|
$
|
(348)
|
|
|
(251)
|
|
|
—
|
|
|
(599)
|
|
|
(56)
|
|
Net cash provided by
Operating Activities
|
$
|
1,914
|
|
|
308
|
|
|
—
|
|
|
2,222
|
|
|
2,343
|
|
Capital
Expenditures
|
(1,119)
|
|
|
(207)
|
|
|
—
|
|
|
(1,326)
|
|
|
(1,334)
|
|
Free Cash
Flow
|
795
|
|
|
101
|
|
|
—
|
|
|
896
|
|
|
1,009
|
|
Cash Interest
paid
|
468
|
|
|
56
|
|
|
—
|
|
|
524
|
|
|
508
|
|
Interest
Income
|
(13)
|
|
|
(12)
|
|
|
—
|
|
|
(25)
|
|
|
(4)
|
|
Unlevered Cash
Flow
|
$
|
1,250
|
|
|
145
|
|
|
—
|
|
|
1,395
|
|
|
1,513
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash
Flow
|
$
|
795
|
|
|
101
|
|
|
—
|
|
|
896
|
|
|
1,009
|
|
Add back: Cash
Acquisition-Related Expenses
|
29
|
|
|
162
|
|
|
(47)
|
|
|
238
|
|
|
15
|
|
Add back: 401(k) cash
funding
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
Free Cash Flow
Excluding Cash Acquisition-Related Expenses
|
$
|
824
|
|
|
270
|
|
|
(47)
|
|
|
1,141
|
|
|
1,024
|
|
|
|
|
|
|
|
|
|
|
|
Unlevered Cash
Flow
|
$
|
1,250
|
|
|
145
|
|
|
—
|
|
|
1,395
|
|
|
1,513
|
|
Add back: Cash
Acquisition-Related Expenses
|
29
|
|
|
162
|
|
|
(47)
|
|
|
238
|
|
|
15
|
|
Add back: 401(k) cash
funding
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|
—
|
|
Unlevered Cash Flow
Excluding Cash Acquisition-Related Expenses
|
$
|
1,279
|
|
|
314
|
|
|
(47)
|
|
|
1,640
|
|
|
1,528
|
|
Level 3
Standalone
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
Fourth
Quarter
|
|
Full
Year
|
|
2017
|
|
2017
|
|
|
|
|
Consolidated Capital
Expenditures through October 31, 2017
|
$
|
101
|
|
|
1,119
|
|
|
|
|
|
Add November and
December
|
207
|
|
|
207
|
|
|
|
|
|
Capital
expenditures
|
308
|
|
|
1,326
|
|
|
|
|
|
Less:
acquisition-related capital expenditures
|
(7)
|
|
|
(17)
|
|
|
|
|
|
Capital expenditures
less acquisition-related expenditures
|
$
|
301
|
|
|
1,309
|
|
CenturyLink, Inc.
Pro Forma Combined Company Results
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
ending December 31, 2017
|
|
Twelve
Months ending December 31, 2017
|
|
|
Reported
|
|
Add
Month
|
|
|
|
Pro
Forma
|
|
Reported
|
|
Predecessor
|
|
|
|
|
|
|
Consolidated
|
|
of
October
|
|
Pro
Forma
|
|
Combined
|
|
Consolidated
|
|
Level
3
|
|
Pro
Forma
|
|
|
|
|
CenturyLink
|
|
Level
3
|
|
Adjustments
|
|
Company
|
|
CenturyLink
|
|
October
YTD
|
|
Adjustments
|
|
Pro
Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
$
|
5,323
|
|
|
701
|
|
|
(21)
|
|
(a)
|
6,003
|
|
|
17,656
|
|
|
6,870
|
|
|
(205)
|
|
(a)
|
24,321
|
|
|
Less colocation
sold to Cyxtera and not retained
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
(194)
|
|
|
|
|
|
|
|
|
|
6,005
|
|
|
|
|
|
|
|
|
24,127
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
services and products
|
2,498
|
|
|
355
|
|
|
(21)
|
|
(a)
|
2,838
|
|
|
8,203
|
|
|
3,481
|
|
|
(195)
|
|
(a)
|
11,489
|
|
|
Selling,
general and administrative
|
1,104
|
|
|
122
|
|
|
—
|
|
|
1,227
|
|
|
3,508
|
|
|
1,208
|
|
|
—
|
|
|
4,716
|
|
|
Depreciation
and amortization
|
1,197
|
|
|
104
|
|
|
—
|
|
|
1,301
|
|
|
3,936
|
|
|
1,030
|
|
|
172
|
|
(b)
|
5,138
|
|
|
Less estimated
net costs of colocation sold to Cyxtera and not retained
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(100)
|
|
|
|
4,799
|
|
|
581
|
|
|
(21)
|
|
|
5,366
|
|
|
15,647
|
|
|
5,719
|
|
|
(23)
|
|
|
21,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
524
|
|
|
121
|
|
|
—
|
|
|
639
|
|
|
2,009
|
|
|
1,151
|
|
|
(182)
|
|
|
2,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
|
|
|
1,301
|
|
|
|
|
1,030
|
|
|
|
|
5,138
|
|
|
Non Cash
Compensation
|
|
|
|
|
|
|
54
|
|
|
|
|
|
|
|
|
238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA
INCLUDING SPECIAL ITEMS AND
|
|
|
|
|
|
|
$
|
1,994
|
|
|
|
|
|
|
|
|
8,260
|
|
ACQUISITION- RELATED
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 3 acquisition
related expenses
|
|
|
|
|
|
|
$
|
39
|
|
|
|
|
|
|
|
|
113
|
|
|
CenturyLink special
items and acquisition-related expenses
|
|
|
|
|
|
|
178
|
|
|
|
|
|
|
|
|
325
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA
EXCLUDING SPECIAL ITEMS AND
|
|
|
|
|
|
|
217
|
|
|
|
|
|
|
|
|
438
|
|
ACQUISITION- RELATED
EXPENSES
|
|
|
|
|
|
|
$
|
2,211
|
|
|
|
|
|
|
|
|
8,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Reported in
CenturyLink Consolidated Statement of Operations
|
|
** Reported in Level
3 Consolidated Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Adjustment reflects
the elimination of operating revenues and expenses for existing
commercial transactions between CenturyLink and Level 3 ($19
million) for the three months ending December 31, 2017 and ($193
million) for the twelve months ending December 31, 2017 and
elimination of Level 3 deferred revenues and charges ($2 million)
for the three months ended December 31, 2017 and ($13 million) for
the twelve months ended December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
Depreciation expense
decreased on Level 3's property, plant and equipment resulting from
decreased PP&E fair value; ($303 million) for twelve months
ending December 31, 2017. Increase in amortization expense
resulting from increase intangible asset fair value and $475
million for the twelve months ending December 31, 2017
|
CenturyLink, Inc.
Pro Forma Combined Company Results
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
ending December 31, 2016
|
|
Twelve
Months ending December 31, 2016
|
|
|
|
|
|
|
|
|
Pro
Forma
|
|
|
|
|
|
|
|
|
|
|
Reported
*
|
|
Reported
**
|
|
Pro
Forma
|
|
Combined
|
|
Reported
*
|
|
Reported
**
|
|
Pro
Forma
|
|
|
|
|
CenturyLink
|
|
Level
3
|
|
Adjustments
|
|
Company
|
|
CenturyLink
|
|
Level
3
|
|
Adjustments
|
|
Pro
Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
$
|
4,289
|
|
|
2,032
|
|
|
(62)
|
|
(a)
|
6,259
|
|
|
17,470
|
|
|
8,172
|
|
|
(264)
|
|
(a)
|
25,378
|
|
|
Less colocation
sold to Cyxtera and not retained
|
|
|
|
|
|
|
(147)
|
|
|
|
|
|
|
|
|
(594)
|
|
|
|
|
|
|
|
|
|
6,112
|
|
|
|
|
|
|
|
|
24,784
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
services and products
|
1,929
|
|
|
1,029
|
|
|
(56)
|
|
(a)
|
2,902
|
|
|
7,774
|
|
|
4,128
|
|
|
(236)
|
|
(a)
|
11,666
|
|
|
Selling,
general and administrative
|
997
|
|
|
345
|
|
|
—
|
|
|
1,342
|
|
|
3,447
|
|
|
1,407
|
|
|
—
|
|
|
4,854
|
|
|
Depreciation
and amortization
|
958
|
|
|
303
|
|
|
67
|
|
(b)
|
1,328
|
|
|
3,916
|
|
|
1,193
|
|
|
408
|
|
(b)
|
5,517
|
|
|
Less estimated
net costs of colocation sold to Cyxtera and not retained
|
|
|
|
|
|
|
(75)
|
|
|
|
|
|
|
|
|
(300)
|
|
|
|
3,884
|
|
|
1,677
|
|
|
11
|
|
|
5,497
|
|
|
15,137
|
|
|
6,728
|
|
|
172
|
|
|
21,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
INCOME
|
405
|
|
|
355
|
|
|
(73)
|
|
|
615
|
|
|
2,333
|
|
|
1,444
|
|
|
(436)
|
|
|
3,047
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
|
|
|
1,328
|
|
|
|
|
|
|
|
|
5,517
|
|
|
Non Cash
Compensation
|
|
|
|
|
|
|
55
|
|
|
|
|
|
|
|
|
236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA
INCLUDING SPECIAL ITEMS AND
|
|
|
|
|
|
|
$
|
1,998
|
|
|
|
|
|
|
|
|
8,800
|
|
ACQUISITION- RELATED
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Level 3 acquisition
related expenses
|
|
|
|
|
|
|
$
|
15
|
|
|
|
|
|
|
|
|
15
|
|
|
CenturyLink special
items and acquisition-related expenses
|
|
|
|
|
|
|
222
|
|
|
|
|
|
|
|
|
264
|
|
|
|
|
|
|
|
|
|
237
|
|
|
|
|
|
|
|
|
279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA
EXCLUDING SPECIAL ITEMS AND
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACQUISITION- RELATED
EXPENSES
|
|
|
|
|
|
|
$
|
2,235
|
|
|
|
|
|
|
|
|
9,079
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Reported in
CenturyLink Consolidated Statement of Operations
|
|
** Reported in Level
3 Consolidated Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Adjustment reflects
the elimination of operating revenues and operating expenses for
existing commercial transactions between CenturyLink and Level 3
($56 million) for the three months ending December 31, 2016 and
($236 million) for the twelve months ending December 31, 2016. The
operating revenues recognized by Level 3 associated with the
existing deferred revenues from prior installation activities that
will likely be assigned little or no value in the purchase price
allocation process ($6 million) for the three months ending
December 31, 2016 and ($28 million) for the twelve months ending
December 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b)
|
Depreciation expense
on Level 3's property, plant and equipment; ($89 million) for the
three months ending December 31, 2016 and ($216 million) for twelve
months ending December 31, 2016 Amortization Expense $156 million
for the three months ending December 31, 2016 and $624 million for
the twelve months ending December 31, 2016
|
CenturyLink, Inc. Pro
Forma Combined Company Results
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
|
|
Fourth
Quarter
|
|
Fourth
Quarter
|
|
Full
Year
|
|
Full
Year
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
CenturyLink
Consolidated Capital Expenditures
|
$
|
743
|
|
|
971
|
|
|
3,106
|
|
|
2,981
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
Predecessor Level 3
|
101
|
|
|
306
|
|
|
1,119
|
|
|
1,334
|
|
|
|
|
|
|
|
|
|
Pro Forma Capital
Expenditures
|
844
|
|
|
1,277
|
|
|
4,225
|
|
|
4,315
|
|
|
|
|
|
|
|
|
|
Less CenturyLink
Standalone Capital Expenditures related to integration of Qwest and
Level 3
|
(8)
|
|
|
(8)
|
|
|
(13)
|
|
|
(23)
|
|
|
|
|
|
|
|
|
|
Less Level 3
Standalone Capital Expenditures related to integration
|
(7)
|
|
|
—
|
|
|
(17)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Less Capital
Expenditures related to colocation business
|
—
|
|
|
(21)
|
|
|
(14)
|
|
|
(58)
|
|
|
|
|
|
|
|
|
|
Pro Forma Capital
Expenditures excluding colocation business and integration of Qwest
and Level 3
|
$
|
829
|
|
|
1,248
|
|
|
4,181
|
|
|
4,234
|
|
|
|
|
|
|
|
|
|
CenturyLink, Inc. Pro
Forma Combined Company Results
|
ADJUSTED PRO FORMA
REVNEUE BY QUARTER
|
(UNAUDITED)
|
(Dollars in
millions)
|
|
|
|
|
|
|
|
Fourth
Quarter
|
Third
Quarter
|
Second
Quarter
|
First
Quarter
|
Fourth
Quarter
|
|
2017
|
2017
|
2017
|
2017
|
2016
|
Business
|
$
|
4,415
|
|
4,427
|
|
4,419
|
|
4,429
|
|
4,451
|
|
Consumer
|
1,401
|
|
1,420
|
|
1,436
|
|
1,447
|
|
1,485
|
|
Regulatory
|
189
|
|
186
|
|
185
|
|
174
|
|
176
|
|
Total Adjusted Pro
Forma Revenue
|
$
|
6,005
|
|
6,033
|
|
6,040
|
|
6,050
|
|
6,112
|
|
|
|
|
|
|
|
By Business
Unit
|
|
|
|
|
|
Medium & Small
Business
|
$
|
874
|
|
896
|
|
893
|
|
901
|
|
918
|
|
Enterprise
|
1,324
|
|
1,311
|
|
1,296
|
|
1,292
|
|
1,263
|
|
International &
Global Accounts
|
941
|
|
918
|
|
911
|
|
891
|
|
905
|
|
Wholesale &
Indirect
|
1,276
|
|
1,302
|
|
1,319
|
|
1,345
|
|
1,365
|
|
Consumer
|
1,401
|
|
1,420
|
|
1,436
|
|
1,447
|
|
1,485
|
|
Regulatory
|
189
|
|
186
|
|
185
|
|
174
|
|
176
|
|
Total Adjusted Pro
Forma Revenue
|
$
|
6,005
|
|
6,033
|
|
6,040
|
|
6,050
|
|
6,112
|
|
|
|
|
|
|
|
By Service
Type
|
|
|
|
|
|
IP & Data
Services
|
$
|
1,839
|
|
1,811
|
|
1,807
|
|
1,819
|
|
1,802
|
|
Transport &
Infrastructure
|
2,092
|
|
2,108
|
|
2,119
|
|
2,092
|
|
2,128
|
|
Voice &
Collaboration
|
1,716
|
|
1,759
|
|
1,768
|
|
1,812
|
|
1,848
|
|
IT & Managed
Services
|
169
|
|
169
|
|
161
|
|
153
|
|
158
|
|
Regulatory
|
189
|
|
186
|
|
185
|
|
174
|
|
176
|
|
Total Adjusted Pro
Forma Revenue
|
$
|
6,005
|
|
6,033
|
|
6,040
|
|
6,050
|
|
6,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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multimedia:http://www.prnewswire.com/news-releases/centurylink-reports-fourth-quarter-and-full-year-2017-results-300599032.html
SOURCE CenturyLink, Inc.